Wednesday, August 14, 2013

It is important to note that while gold backwardation lasted a few days in 1999 and again in 2008 -- both of which marked major bottoms and key turning points in the price of gold -- we now have 31 trading days of backwardation and a gold price that has already risen $135 from when the backwardation began. What we are seeing today is truly unprecedented and historic. - James Turk, from King World News interview - LINK

Just for reference, after 13 years of researching, studying, trading and investing in the precious metals markets, James Turk is one of the very few analysts who I still consider worth reading for insight and facts. "Backwardation" is when the spot price of gold is higher than the next month futures' price. It means that the market is assigning a higher value to physical gold that can be delivered immediately than to cash.

About a month ago I wrote an article that discussed the significance of the negative gold forward interest rate (GOFO) that was being observed in London and is published by the London Bullion Market Association (LBMA). The GOFO is the interest rate charged for a dollar/gold swap, which is when someone who owns gold needs a short term dollar loan and he collateralizes the loan with his gold. When the rate is negative, it means that someone wants his gold more than he wants to borrow dollars and it signifies an extreme shortage in physical gold that can be immediately delivered to large buyers who are forcing the issue of delivery and it is another form of "backwardation."

The only conclusion that can be drawn from this situation is that the bullion banks in London are scrambling to find physical gold that can be delivered into the massive demand coming from Asia, specifically China. I also believe that the duration and severity of the negative GOFO will translate directly intoa commensurate move higher in gold that will shock everyone.

Unfortunately, the best we can hope for is that the next move in gold does not culminate with the cataclysmic currency reset that we all know is coming - i.e. the dollar is replaced as the world's reserve currency, which will render the U.S. largely destitute:

I'm not worried about how high in price gold is going, I'm worried about what the world around us will look like when it gets there.

Americans will soon be locked into an unaccountable police state unless US Representatives and Senators find the courage to ask questions and to sanction the executive branch officials who break the law, violate the Constitution, withhold information from Congress, and give false information about their crimes against law, the Constitution, the American people and those in Afghanistan, Pakistan, Yemen, Iraq, Libya, Syria, Somalia, Guantanamo, and elsewhere. Congress needs to use the impeachment power that the Constitution provides and cease being subservient to the lawless executive branch. The US faces no threat that justifies the lawlessness and abuse of police powers that characterize the executive branch in the 21st century.

National Intelligence Director James R. Clapper blatantly lied to Congress and remains in office. Keith B. Alexander, Director of the National Security Agency, has also misled Congress, and he remains in office. Attorney General Holder avoids telling Congress the truth on just about every subject, and he also remains in office. The same can be said for President Obama, one of the great deceivers of our time, who is so adverse to truth that truth seldom finds its way out of his mouth.

If an American citizen lies to a federal investigator, even if not under oath, the citizen can be arrested, prosecuted, and sent to prison. Yet, these same federal personnel can lie to Congress and to citizens with impunity. Whatever the American political system is, it has nothing whatsoever to do with accountable government. In Amerika no one is accountable but citizens, who are accountable not only to law but also to unaccountable charges for which no evidence is required.

"The so called "investors" on Wall Street, and, particularly, the get-rich-quick speculators at COMEX, are so trusting and foolish that they are incapable of "weighing" anything in an intelligent way. They act solely from greed and fear, and nothing else.

These muppets are morons, and perfect dupes for the international banking mafia which, time and time again, uses them to induce false pricing, both up and down, buying and selling to one another, manipulating performance bond levels, and periodically using captive central banks, such as the Federal Reserve and Bank of England, to flood markets with physical gold to back up paper based manipulations. The mass of regular people in India, China, Turkey, Arab countries, Russia, South America, etc., do not frequent Wall Street or the financial district of London, nor do they believe the propaganda distributed by the mass media. They are immune from the stupidity of the muppets, and will steadily drive prices upward.

The same manipulators and muppets also operate in all stock, bond and commodity markets. They do not merely manipulate in one direction. Manipulators in the gold market intentionally induce volatility in both directions. Mostly, that is because of an overt government guarantee against prosecution and possible losses during downward manipulation. The upside manipulations, therefore, are for the purpose of placing profitable short positions at artificial highs that the metal is not ready to stabilize at. Then, the subsidized downward manipulation begins. The opposite is true in the stock market. There, banksters are guaranteed against prosecution and losses on upward manipulations, and stock prices are pressed downward to allow the banksters to buy low and sell high. I should add that this dynamic may be changing, as the banksters now heavily long on COMEX gold. Perhaps, the US Exchange Stabilization Fund is refusing to guarantee further manipulations? We don't know, but will monitor that...

Evil, of course, always manages to destroy itself. The current corrupt system will fall apart with time. Gold has been and will be going up in the longer run, because of the great mass of productive non-corrupt normal people of the world, and NOT because of the group of morans and manipulators in Wall Street and in London are pressing prices one way or another. The mass of the world's population wants gold, not paper and/or electrons, and, for this reason, and no other reason, gold will rise."

Michael Hayden, Bob Schieffer and the media's reverence of national security officials The former NSA director is held up by the Face the Nation host as an objective authority when he is everything but that

As Marcy Wheeler noted: "the 2009 Draft NSA IG Report that Snowden leaked [and the Guardian published] provided new details about how Hayden made the final decision to continue the illegal wiretapping program even after DOJ's top lawyers judged it illegal in 2004. Edward Snowden leaked new details of Michael Hayden's crime." The Twitter commentator sysprog3 put it this way:

Inviting Hayden to comment on regulation of surveillance is like having Bernie Madoff comment on regulation of Wall Street."

But inviting Hayden to do exactly that is what establishment media outlets do continually.

But worse than the omission of Hayden's NSA history is his current - and almost always unmentioned - financial stake in the very policies he is being invited to defend. Hayden is a partner in the Chertoff Group, a private entity that makes more and more money by increasing the fear levels of the US public and engineering massive government security contracts for their clients. Founded by former Homeland Security secretary Michael Chertoff, it's filled with former national security state officials who exploit their connections in and knowledge of Washington to secure hugely profitable government contracts for their clients. As the Huffington Post's Marcus Baram reported:

Illustrative for the impact of the NSA's espionage is the use of anonymous accounts in this comments' section. Anonymous signatures must be preferred as soon as anyone is discussing Washington’s Criminality. After all in the USA you may easily be identified as an unpatriotic enemy and killed on the spot by a remotely operated drone.

Question : Is there a formal list of names being collected which documents every violation committed.The reason for such a list would be to hold the perpetrators accountable for theiractions at a point where recognition is deemed necessary. It is almost guaranteed that they will try and blend in with the rest of society once the fallout commences. Big or small , doesn't matter regarding their title and position. Every traitor should be held accountable for their actions!

Eric Arthur Blair aka George Orwell

"Hope" is not a valid investment strategy

Full Time Jobs Over Last 5 Years

Is Your Gold Missing?

Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Epic Quote - "Jesse" Sent This To Me

"The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title." - Anonymous

The Basic Fundamental Problem

What's the solution?

“THERE IS NO MEANS OF AVOIDING THE FINAL COLLAPSE OF A BOOM BROUGHT ABOUT BY CREDIT EXPANSION. THE ALTERNATIVE IS ONLY WHETHER THE CRISIS SHOULD COME SOONER AS THE RESULT OF A VOLUNTARY ABANDONMENT OF FURTHER CREDIT EXPANSION OR LATER AS A FINAL AND TOTAL CATASTROPHE OF THE CURRENCY SYSTEM INVOLVED.”

Ludwig von Mises – Austrian Economist (1881- 1973)

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie? JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

Priceless Quote From Richard Russell

On Larry Summers: This doofus practically ruined Harvard when he headed it. I can't think of a worse choice to be chief economic advisor. I wouldn't trust Summers to manage a Starbucks franchise.

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.

Quote of the Month

And very relevant in the context of yesterday's post about gold moving higher against all fiat currencies:

Just imagine what would happen if a mere ten percent of the money currently going into bonds were instead to go into gold. As in 1972, the real move has yet to begin.

- Murray Pollit, Pollit & Co.

A Picture Says It All...

www.moneyandmarkets.com

Golden ore samples produced by Eurasian Minerals

Undisclosed exploration site

The Next Reserve Currency?

1 oz. Chinese Panda

Guess who said this?

Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies...What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment.

-Alan Greenspan, 9 Sep 2009

THIS is what REAL money looks like

1 oz. Gold Eagles

Alan Greenspan said what?

“Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.”

From "Gold and Economic Freedom" a 1966 Essay by Alan Greenspan

About Me

I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for a large bank. I have an MBA from the University of Chicago, with a concentration in accounting and finance.
Currently I co-manage a precious metals and mining stock investment fund in Denver.
My goal is to help people understand and analyze what is really going on in our financial system and economy.